Bill would declare mortgage floor clauses abusive

Automatic summary, not yet reviewed

1. The bill adds a new section to Article 87 of the General Law for the Defense of Consumers and Users to declare floor clauses abusive in mortgages on the family home when there is no cap on rate increases, when the floor is equal to or greater than 40% of the reference index, or when the gap between floor and cap is 4 percentage points or more.
2. Mortgages on the family home with an outstanding balance would have to adjust their rate floor limits to what the law says, at no cost to the consumer. Removing the abusive clause would affect the monthly payment the month after the law takes effect.
3. Any rules of equal or lower rank that conflict with the law would be repealed.
4. The law would take effect the day after its publication in the Official State Gazette (Boletín Oficial del Estado).

Who it affects

• People with a mortgage on their main home that includes a floor clause: The clause could be removed and their monthly payment reduced, at no cost for the adjustment.
• Lenders that grant mortgage loans: They could not set interest rate floors that the law deems abusive.

Words worth knowing

Cláusula suelo (floor clause)

A mortgage term that caps how far the interest rate can fall, so the payment does not drop even when official rates fall.

Cláusula techo (cap clause)

A term that caps how high the interest rate on a mortgage can rise.

Cláusula abusiva (abusive clause)

A term imposed by a company that unbalances the contract to the consumer's detriment.

Euribor

The index to which variable-rate mortgages in Spain are usually tied.

Saldo pendiente de amortización (outstanding balance)

The part of the loan that still remains to be paid.

It summarizes the text as it was introduced. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries